Money

Nokia wins Chinese approval for Microsoft deal

Sakari Suoninen, REUTERS

Tuesday, April 8, 2014
9:38:09 EDT AM

A man is silhouetted against a video screen with as he poses with a Nokia Lumia 820 smartphone in this photo illustration taken in the central Bosnian town of Zenica, in this Sept. 3, 2013 file photo. REUTERS/Dado Ruvic/Files

HELSINKI - Nokia has won approval from Chinese competition authorities to sell its mobile phone business to Microsoft Corp without having to change its main technology patent practices, it said on Tuesday.

The Finnish company agreed in September to sell its flagship business to Microsoft in a 5.4 billion euro ($8.1 billion) deal. However, it kept its patent portfolio, viewed by analysts as a promising source of future growth.

Nokia's announcement on Tuesday sent its shares up 3.1% to 5.49 euros as investors had feared Chinese regulators could demand tough future conditions for Nokia's patents business.

Nokia said it still expected the Microsoft deal to close this month but would not comment on which approvals were still needed before that.

The deal has received the green light from other regulators including in the United States and European Union. Such approvals are needed due to the size of the transaction and the companies' presence in the different markets.

Nokia said it had pledged to honour fair, reasonable and non-discriminatory (FRAND) patent licensing principles, but added that it had not been accused of unfair practices.

"No authority has challenged Nokia's compliance with its ... undertakings related to standard-essential patents or requested that Nokia make changes to its licensing programme or royalty terms," it said in a statement on Tuesday.

Nokia, which once dominated the global mobile phone business, holds a portfolio of about 30,000 technology patents - some essential for mobile communications - which analysts have said could be worth between 3 billion and 10 billion euros.

"The Chinese approval had been a question mark," Inderes analyst Mikael Rautanen said. "There were some worries that Asian authorities would tack on additional conditions to Nokia patents, which would have weakened Nokia's profit opportunities."

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Google and Samsung had asked Chinese regulators to ensure that the deal with Microsoft would not lead to higher licensing fees, according to media reports.

Nokia and Microsoft both dismissed suggestions that they could seek to abuse their position as a holder of many patents essential to mobile phone standards.

"As we ... plan to continue to honour our FRAND undertakings in the future, we are prepared to voluntarily reaffirm Nokia's continuing commitment to FRAND licensing principles," Nokia said, adding that it had given the statement to the Chinese commerce ministry.

Microsoft said it had pledged not change its main patent licensing practices for eight years.

"It has never been our intent to change our practices after we acquire the Nokia business," David Howard, Microsoft vice president for litigation and antitrust, wrote on the U.S. company's blog.